Despite still reeling from COVID-19-related headwinds, Humana Inc. (NYSE: HUM) experienced better-than-expected results in its home and provider businesses during the second quarter of 2021.
“Our strong operating performance this year is, in part, attributed to our strong partnerships with providers who are delivering high-quality care to our members,” Bruce Broussard, president and CEO of Humana, said during a Q2 earnings call on Wednesday.
Currently, 87% of the company’s provider partners and value-based arrangements are in surplus, according to Broussard.
As an organization, Humana has long championed the importance of a value-based mindset, believing that a “total-cost-of-care approach” could contribute to improved outcomes overall, especially in home health care.
“We have a very strong belief that a value-based mindset needs to come to the home health space,” Susan Diamond, CFO of Humana, previously told Home Health Care News. “The current model is based on fee-for-service reimbursement, which really doesn’t provide the right incentives for home health companies to comprehensively support patients’ needs. The current model is designed more around whatever the immediate need is, whatever led to that referral in the first place.”
Both payer and provider, Louisville, Kentucky-based Humana’s home-based care business lines include Humana At Home and Kindred at Home. Eventually, the company plans to wrap the Kindred business into its “CenterWell” brand.
During Wednesday’s call, Humana leaders also provided an update on its plans to acquire the remaining 60% of home health giant Kindred at Home. The company first announced the news in April.
“With the expected integration of Kindred at Home, our home business is growing significantly,” Diamond said during the Q2 call.
Back in 2018, Humana made a splash in the home-based care space with the purchase of a 40% stake in Kindred at Home. Humana agreed to purchase the rest of Kindred at Home for $5.7 — marking the company’s largest acquisition to date. The deal is slated to close in mid-August.
Although she has transitioned to the CFO role, Diamond will remain involved in Humana’s home-based care plans. She previously served as president of the Humana home business segment.
“An extensive knowledge of our business made her uniquely positioned to step into the CFO role,” Broussard said. “The board and I have great confidence in her abilities, and the contribution she’ll make in the next chapter for Humana as we execute on our strategic plan and deliver shareholder value. In addition, due to the strategic nature of the CFO role, Susan will continue to contribute in a meaningful way to our home health business.”
Humana has tapped Amy Smith, currently vice president of investor relations, to become vice president and CFO of Home Solutions.
Beyond home-based care, the COVID-19 emergency and its broader impacts on the company are still top of mind for Humana.
“Our core fundamentals are performing well,” Broussard said. “2021 is a year of COVID-19 transition with various pandemic-related financial impacts, including reduced Medicare Advantage revenue resulting from the significant temporary deferral of utilization, as well as the lingering long near-term uncertainties regarding the pace and level of return of utilization for the balance of the year.”
For context, Humana’s 2021 expected individual Medicare Advantage membership growth range is 425,000 to 475,000 members.
Broussard also noted that, in recent weeks, Humana has seen an increase in COVID utilization, which the company plans on keeping a close eye on.
Still, Humana’s leaders are optimistic that 2022 will bring on more normalcy in terms of the company’s bottom line and member engagement.
“The health care system has been open for several months, and we have seen vaccination rates [among] seniors reach approximately 80% nationally,” Broussard said. “Accordingly, our members continue to engage in more routine interactions with their providers, which we anticipate will result in more normalized Medicare Advantage revenue next year.”
Overall, the company’s health care services segment, which includes Kindred at Home, saw revenues of $7.5 million in Q2 2021, up 8% from $6.9 million in Q2 2020.
Humana’s Q2 consolidated revenues totaled $20.65 billion, up from $19.08 billion in Q2 2020.
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